IT LOOKS LIKELY this will be a one-newspaper town following the Seattle Times' Jan. 6 announcement that it lost money in 2002. That makes three consecutive years of losses for the paper, which can now invoke a "stop-loss" clause in its federally sanctioned joint operating agreement with the Seattle Post-Intelligencer. That could result in the P-I being shuttered by Hearst Corp. Under the JOA, the Times handles advertising, production, and circulation of the P-I, which has a separate, independent news operation but no printing press.
"It looks like one more piece in the puzzle," Liz Brown, administrative officer of the Pacific Northwest Newspaper Guild, says of the Times' 2002 loss. The Guild represents news, advertising, and circulation employees at the Times and news employees of the P-I.
The stop-loss clause requires the Times and Hearst to enter into talks on how to dissolve the agreement. Currently, profits are split 60 percent for the Times and 40 percent for the P-I. If Hearst chose to close its paper, under the agreement it would still earn 32 percent of the Times' profits until the agreement expires in 2083.
All the same, initial speculation is that Hearst isn't going to play dead. "I don't think Hearst will sit back and say, 'OK, we'll quit,'" says John Morton, a newspaper industry consultant who does work for Hearst. In November, Times publisher Frank Blethen, whose family owns 51 percent of the Seattle Times Co., said that Seattle could only support one viable daily newspaper and that the company would move to dissolve the JOA if the paper produced red ink in 2002. Morton contends that the economics are right to keep two dailies going.
Kerry Coughlin, a Times spokesperson, declined to say how much money the privately held company lost in 2002 or when it might start to unravel the JOA by invoking the stop-loss clause. But it's clear that something is afoot. The Times also has hired Bill Richards, a former Wall Street Journal and Washington Post reporter, to work as a freelancer, covering the ins and outs of the Times-P-I agreement—a move the Times would not likely have made absent a story to be reported. Richards also was briefly a P-I staffer. He will work under a unique arrangement in which senior Times editors will have no input on his stories.